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LEADERSHIP STYLE AND ORGANIZATIONAL COMMITMENT:
A STUDY IN PANASONIC ENERGY MALAYSIA
ARULKUMAR
Master of Science (Management) Universiti Utara Malaysia,
Dec 2016
LEADERSHIP STYLE AND ORGANIZATIONAL COMMITMENT:
A STUDY IN PANASONIC ENERGY MALAYSIA
BY
ARULKUMAR
Research Paper Submitted to School of Business Management,
Universiti Utara Malaysia,
In Partial Fulfillment of the Requirement for the Master of Science (Management)
Dec 2016
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Unlversltl Utara Malaysia
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DECLARATION
I, the undersigned, hereby declare that this research paper is my own original work and that all sources have been accurately reported and acknowledged, and that this document has not been previously, in its entirety or in part, submitted at any university in order to obtain academic qualifications.
ARULKUMAR 811016
DATE
PERMISSION TO USE
In presenting this dissertation in partial fulfillment of the requirements for a Post Graduate degree from the Universiti Utara Malaysia (UUM), I agree that the Library of this university may make it freely available for inspection. I further agree that permission for copying this dissertation in any manner, in whole or in part, for scholarly purposes may be granted by my supervisor(s) or in their absence, by the Dean of School of Business Management where I did my research. It is understood that any copying or publication or use of this research parts of it for financial gain shall not be allowed without my written permission. It is also understood that due recognition shall be given to me and to the UUM in any scholarly use which may be made of any material in my dissertation.
Request for permission to copy or to make other use of materials in this dissertation in whole or in part should be addressed to:
Dean of School of Business Management Universiti Utara Malaysia
0601 0 UUM Sintok Kedah Darul Aman
ABSTRACT
In Panasonic Energy Sdn Bhd, the research investigation had been taken to identify the relationship between the organizational commitment and the leadership style. Data for this study was gathered from a sample of 169 rater's.
Questionnaire was distributed to all the operators in the Module department and total 120 questionnaires were returned. According to The Full Range Leadership Development Theory, the multifactor leadership questionnaire is utilized within the organization to determine the leadership style. Employee commitment was measured using Bagraim's (2004) Organizational Commitment, adaptation of Meyer and Allen's (1 997) Three-Component Model of employee commitment. Leadership was identified as the independent variable and organizational commitment as the dependent variable. Data was obtained from questionnaires which were distributed to module production direct employee. Overall findings from this study suggest that transformational and transactional leadership plays important roles in determining levels of affective commitment, continuance commitment and normative commitment.
This research therefore adds a new dimension to the body of literature that will help researchers' efforts to understand the relationship between leadership style and organizational commitment. As this research takes place in Kulim Kedah context, it contributes to the bank of findings relating to the development of organizational commitment.
ABSTRAK
Penyelidikan kuantitatif di Panasonic Energy Sdn Bhd adalah bertujuan untuk mengkaji perhubungan diantara pelbagai jenis gaya kepimpinan and komitmen organisasi
.
Data untuk kajian ini telah dikumpulkan daripada 169 orang sample.
Rorang soal selidik telah diedarkan kepada selnua opearator dalam jabatan Modul dan jumlah 120 soal selidik telah diken1balikan.Menurut Teori Full Range Leadership Development soal selidik kepimpinan pelbagai faktor telag digunakan dalam organisasi untuk menentukan gaya kepimpinan.Komitmen pekerja pulak diukur inenggunakan Komitmen Organisasi Bagrain1 (2004) satu penyesuaian dari Meyer dan Allen (1997) iaitu model komitmen pekerja Tiga Komponen
.
Kepimpinan telah dikenal pasti sebagai pembolehubah bebas dan komitnmen organisasi sebagai pembolehubah bersandar. Data diperolehi daripada borang soal selidik yang diedarkan kepada di bahagian modul.
Hasil daripada kajian ini menunjukkan bahawa kepimpinan transforinasi dan transaksi memainkan peranan penting dalatn menentukan tahap komitmen afektif, komitmen berterusan dan komitmen normatif.Justeru itu, kajian ini telah menambah satu lagi dimensi baru kepada badan sastera yang akan nlembantu usaha penyelidik untuk memahaini hubungan di antara gaya kepimpinan dan komitmen organisasi. Penyelidikan ini berlaku dalam konteks Kulim Kedah, ia menyumbang kepada bank penemuan yang berkaitan dengan petnbangunan komi tinen organisasi
ACKNOWLEDGEMENTS
Firstly I would like to thank my supervisor Dr. Subra for making this a meaningful learning process. His guidance and encouragement throughout the process of formulating my ideas was very invaluable. His ability in viewing things pragmatically was critical and priceless to the success of this study and needs to be commended.
My thanks also go to all employees from Panasonic Energy who took the time to complete all questionnaires, without them this research would not have been successful.
Last but not least, I am forever indebted to my wife, Mageswari and children Darshanaa and Darshiniy for their unconditional love, support and encouragement. You guys were truly my inspiration and were ultimately responsible for my success in life. My parents receive my deepest gratitude and love for their dedication, encouragement and the support that provided the foundation for this work.
Contents
DECLARATION
...
iiABSTRACT
... ...
I I I ABSTRAK...
vACKNOWLEDGEMENTS
...
viLIST OF FIGURES
...
xLIST OF TABLES
...
xiCHAPTER 1: INTRODUCTION
...
131.0 Background of the study
...
131.1 Problem Statement
...
161.2 Research Questions
...
191.3 Research Objective
...
191.4 Significance of the study
...
201.5 Scope of the study
...
221.6 Definition of Key Term
...
23The major terms and definition can be seen along these upcoming five chapters
...
231.6.1 Leadership
...
231.6.2 Organizational commitment
...
241.7 Organization of the study
...
24CHAPTER 2: LITERATURE REVIEW
...
252.0 Introduction
...
252.1 Organizational Commitment ... 25
2.1.1 Affective Commitment
...
272.1.2 Continuance Commitment
...
272.1.3 Normative commitment
...
292.2 The significance of Organizational Commitment
...
302.3 Definition of Leadership
...
322.4 The Importance of Leadership
...
332.5 Leadership Theories
...
352.5.1 Trait Approach
...
372.5.2 Behavior Approach
...
382.5.3 Contingency Approach
...
39 2.6 FULL RANGE LEADERSHIP APPROACH...
4 1vii
2.6.2 Transactional leadership style ... 47
2.6.3 Integrating transformational and transactional leadership styles
...
492.7 Limitation of transformational leadership
...
502.8 Review of Prior Empirical Studies on the impact of leadership behavior on organizational
...
5 1 2.9 Summary...
52CHAPTER 3 : METHODOLOGY
...
543.0 Introduction
...
543.1 Research Design
...
553.1.1 Research Site
...
563.1.2 Population and sampling procedure
...
573.1.3 Questionnaire Design
...
583.1.4 Relevancy of the Questions
...
593.1.5 Wording of the Questions
...
593.1.6 Number of questions1 Questionnaire length
...
593.1.7 Pilot Testing
...
603.1.8 Data Collection
...
6 1 3.2 Instruments...
6 1 3.2.1 Demographic Factor...
623.2.2 Multifactor Leadership Questionnaire [MLQI
... . . ...
623.2.3 Reliability and Validity of the Multifactor Leadership Questionnaire
...
633.2.4 Organizational Commitment Questionnaire [OCQ]
...
643.2.5 Reliability and Validity of the Organizational Commitment Questionnaire
...
653.3 Hypothesis Development
...
;...
653.3.1: Relationship between transformational leadership style and affective commitment
...
653.3.2 Relationship between transformational leadership style and continuous commitment
...
663.3.3: Relationship between transformational leadership style and normative commitment
...
663.3.4: Relationship between transactional leadership style and affective commitment
...
673.3.5: Relationship between transactional leadership style and normative commitment
...
683.4 THEORETICAL FRAMEWORK
...
69 viii3.5 Data Analysis
...
703.5.1 Descriptive Statistics
...
703.5.2 Goodness of Measures
...
703.5.3 Analysis of Means
...
7 1 3.5.4 Hypothesis Testing...
7 1 3.6 Data Analysis Technique... . . ...
733.7 Summary
...
73CHAPTER 4: RESULTS AND DISCUSSIONS
...
754.0 Introduction
...
754.1 CHARACTERISTICS OF TARGETED SAMPLE
...
754.1.1 Response rate
...
754.1.2 Demographic Analysis
...
754.2 DESCRIPTIVE STATISTICS
...
774.3 RELIABILIW TEST
...
794.4 Inferential Statistics
...
8 1 4.4.1 Pearson Correlation...
824.4.2 Multiple Regressions
...
844.5 Overall Hypotheses Results
...
874.4 Conclusion
...
88CHAPTER 5: DISCUSSION, RECOMMENDATIONS AND
...
89CONCLUSIONS
...
89...
5.1 INTRODUCTION 89 5.2 DISCUSSION OF THE RESULTS...
895.3 IMPLICATIONS FOR PRACTICE
...
935.4 LIMITATIONS OF THE STUDY
...
945.5 RECOMMENDATIONS FOR FURTHER RESEARCH
...
945.6 CONCLUSIONS
...
95REFERENCES
...
97LIST OF FIGURES
Figure 2.1 : The basic Leadership Approaches
Figure 2.2: Hersey's and Blanchard's Situational Leadership@ model Figure 2.3: Transformational leadership process (Bass, 1985a) Figure 2.4 Transactional leadership process (Bass, 1985a) Figure 3.1 Flowchart of the Research Design
Figure 3.2: Likert Scale and Scores Assigned for the Survey Figure 3.3: Likert Scale and Scores Assigned for the Survey
LIST OF TABLES
Table 3.1 : Layout of the Questionnaires Table 3.2 Theoretical Framework Table 3.3: Classification of Level
Table 3.4: Interpreting strength of relationship coefficient Source: Davis (1 97 1)
Table 4.1 : Summary of Demographic Variables
Table 4.2: Descriptive Statistics of Transformational Leadership,
Transactional Leadership, Affective commitment, continuance commitment, Normative commitment (N=120)
Table 4.3: The Rules of Thumb about Cronbach Alpha Coefficient Size Table 4.4: Reliability Coefficients (Cronbach Alpha) of the scales Table 4.5: Rules of Thumb About Correlation Coefficient Size*
Table 4.6: Correlations between Transformational Leadership, Transactional Leadership and Affective Commitment, Continuous Commitment and Normative Commitment (N= 120)
Table 4.7: Results of the Multiple Regression Analysis with Transformational Leadership and Transactional Leadership with Affective
Commitment (N=120 )
Table 4.8: Results of the Multiple Regression Analysis with Transformational Leadership and Transactional Leadership with Continuance Commitment (N=120 )
Table 4.9: Results of the Multiple Regression Analysis with Transformational Leadership and Transactional Leadership with Normative
Commitment (N=120 )
Table 4.10: Overall Hypotheses Results Table
LIST OF APPENDICES
APPENDIX A : Survey Notification APPENDIX B : Respondent Background
APPENDIX C : Multifactor Leadership Questionnaire APPENDIX D : Organizational Commitment Questionnaire APPENDIX E :Demographics Characteristic Respondents APPENDIX F : Pearson Correlation
APPENDIX G : Reliability
CHAPTER 1: INTRODUCTION
1.0 Background of the study
Organizational commitment has a profound implication for employees and organizations through various studies by researcher .Bennett and Durkin (2000) stated that the negative effects associated with a lack of employee commitment which includes turnover and absenteeism. Drucker (1999) has suggested that organizations evolves responsibility are more focused than authority whereby supervisors job is not to command but also to persuade thru the leadership style. Yet the employee also needs to be ready to commit themselves to be supportive to remain competitive in the market. Retaining employee and keep them continually committed to their organization remaining as one of the important issue in today's management .This is why great focus and awareness has been given to study organizational commitment (Mowdays, Porter & Steers , 1979 :Allen & Meyer ,1990)
.
Previous research findings and theories although addressing that employee commitment to an organization is affected by leadership style, but the interrelationship still remain unclear. For example can immediate superior influence on the employee commitment and can the immediate superior use appropriate leadership style and technique to improve employee commitment.
The need of this study is to obtain deeper knowledge of the relationship between the perception of leadership style and organizational commitment among manufacturing employee in Malaysia specifically in MlVC, for this reason supervisors and operators from Panasonic Energy Sdn Bhd was chosen
to enhance the findings of this study. A multinational company (MNC) is one which incorporated in one country, but whose operation extends beyond the home country, which carries on business in other countries besides the home country. According to Neil H.Jacoby (1973) "A multinational corporation owns and manages business in two or more countries."
Therefore this chapter focuses mainly on the manufacturing sector in Malaysia, whereby it will provide the overview of contribution, performance as well the performance of the sector to the Malaysian economic growth.
Since 2005 manufacturing sector has increased its contribution to Malaysian GDP by 75% to RM 193 billion in 2013 compared to RM 110 billion in 2005.
Manufacturing sector contribution to nation GDP is about 28 % which shows that special focus needed to sustain the performance of this sector (2013 Economic Transformation Program Annual Report ) .Performance of the manufacturing sector in between January and November 20 14 has showed an increase in term of sales value by 6.1 % which is RM 600.1 billion .During the same period the number of employee increased by 1.5 % to 1,030,383 persons, while the productivity increased by 4.6 % to RM 582,421 (Department of Statistics 2015c).Moving forward to vision 2020 the need for highly committed human capital and strong leadership needed to contribute to the nation building .It has always been a common complaint in Malaysia that employees are less loyal comparatively then in the past
.
Malaysian employees basically would choose to leave their organization for better carrier growth and prospect as their commitment is low. Hence the biggest challenges in this industry are to instigate a sense of commitment among the employee. Theperformance of an organization does not only depend on the utilization of the human capital but also on how it incites commitment to the organization.
House and Aditya ( 1 997) has provided an extensive historical approach and scientific review of leadership study .According to them studies of leadership has moved in several direction, and out of the several direction there have been found that there are two approaches which has dominated the studies .The first approach has focus on leadership behavior and leadership characteristic and the second approach leadership style and demonstration of leadership. According to House (1995) definition of leadership is " leadership is behavior " which gives purpose meaning and guidance which has a collective vision that appeals to ideological motives and self-perception of the followers .In recent days starting point of most studies focusing on the organizational leadership and the ability to influence people to perform task using motivational method rather than using authority .Heilburn (1994) has divided leadership theories into three stages for decision :
-
The first stage is to define leaders (The theory of leader features )-
The second stage is to study leader behavior (The theory of leadership behavior)-
The third stage is to focus on the interaction between leaders and subordinatesIt is crucial for the leaders in manufacturing to be furnished with leadership skills due to leadership roles are critical in target setting and enhancing
commitment. The absence of leadership in an organization can give a significant impact to implementation and sustaining strategic growth.
Although the previous research has contributed a great attention to the relationship between leadership style and organizational commitment, but it has been found that results of the study are not consistent. Several studies have been found a positive relationship between these two variables. Kent and Chelladurai (2001) posited that individualized consideration had positive relationship with both affective commitment and normative commitment.
Price (1997) also suggested employees will be highly committed to the organization only when there is an existence in the level confidence towards their leaders. Leadership researches have also shown a consistent linkage between transformational leadership and some part of engagement .The subordinates trust over the leaders and the support offered by leaders will create a blame free environment. Studies have provided evidence that there link between positive leader behavior and follower's behaviors and attitudes which is associated with commitment.
1.1 Problem Statement
Thus based on the background above , it can be concluded that employee commitment is the basic of success of any organization .In today's global business environment , job satisfaction and stability of job is not enough to associate with employee job performance that will lead successful business result .Recently employers focus has shifted from employee who
satisfied with their income, working environment and benefit to those who committed to their organization's mission .Employees who are committed to their organization believed to have dedicate most of their time, energy, skill and talent than those employee who is not.
According to Raja & Palanichamy (201 1) Organizational commitment can be defined as the degree of an employee's identification with participation and involvement in an organization and remains employed in an organization and becoming one of its members. To build high employee commitment leaders need to play an active role to bring changes in the organization in order to benefit entire organizations member. The leaders should consists of higher level of managing skill in continuously keeping well of the entire organization and employees. According to Keskes (2014) Leadership plays an important role in management to maximize the efficiency and to lead the organization to achieve its vision and mission. The rate of employee loyalty can be increase by creating a comfortable working environment for their employees. Every employee should increase their individual potential by increasing their knowledge, skills and behavior to advance their company level. Employees are the backbone of the every organization. According to Fang, Chang & Chen (2009), leadership has significant and positive impact to influences the employees" commitment toward an organization. An organization which is concerned in giving the best to customer need leaders and managers who can mold and shape the entire culture of an organization in term of vision and mission .Leaders are the one who expected to cultivate the spirit of team work in an organization in order to enhance and improve employee's performance.
Strong cooperation and relationship between leaders and subordinates will create a strong and committed team which will drive the organization towards success path. Strong leadership and high commitment from the employee will automatically reduce high turnover which subsequently lead to cost reduction.
From the stated issues this research is conducted to study if there is a significant correlation between the leader's style and the commitment of employees towards their organization. This study examines two types of leadership styles namely transformational and transactional the impact on the organizational commitment. However laissez faire leadership was not included in this study as it is not related to direct labor such as manufacturing operators.
The short version of laissez faire leadership is doing what you want as long as you get the job done right. In actual manufacturing environment the operators need to follow direction and target set by the organization and their leaders thus they are not allowed to make their own judgment and decision. On these current ages, there are research department that undergoes research in finding relationship between employee's commitment and leadership. Unfortunately, there are not much of output can be gain from the investigation of the employees commitment in MNC at Malaysia. The rate of leadership are being rated by the leaders itself not by the employee's perceptions. In this kind of situation would ruin over the leadership evaluation from particular organization. That kind of orders should be neglected to increase the rating of leadership on that particular organization. Therefore, these projects do explain the methods in rating the leader's leadership level from a simple employee in MNC. In these studies, there is additional information being collected from the employee during rating up their leader's leadership level. The employee's
current feelings, perceptions and experiences are collected as additional information for our project. The employees do identify a suitable leadership style which should be utilized in manufacturing environment. This research would lead to a new kind of theoretical contributions to manufacturing industrials. This would increase the production of entire manufacturing industrials because of consists a higher level of contribution from their staffs.
1.2 Research Questions
The research seeks to answer the following research questions.
1. Is there any relationship between leader's style and organization commitment of manufacturing employee?
2. Which Leadership style is significant predicting Organizational Commitment In?
3. What is the level of Leadership Style among Supervisors in Panasonic Energy Kulim?
4. What is the level of Organization Commitment among employee in Panasonic Energy Kulim?
1.3 Research Objective
The general objective of this study is to examine the relationship between leadership styles and organizational commitment.
The specific objectives of this study are as follows:
a) To determine the level of Leadership Style among Supervisors in this company
b) To examine the relationship between Leadership Style and Organization Commitment
c) To identify the type of Leadership style significant in predicting Organizational commitment
d) To determine the level of Organization Commitment among employee of the company.
1.4 Significance of the study
According Drury, (2004); Lee & Ahmad, (2009) , leadership style is the key element which may influence the organizational commitment and it's style may enhance organizational commitment of employees .Many previous studies have been done on leadership style and organization commitment but there are limited researches done in the Malaysian context. According to Dumdum, Lowe & Avolio, 2002 evidence shows that the style of leadership is mainly associated with behavior and work attitude. Correlation analysis shows that transformational and transactional leadership style is related to employees' organizational commitment (Marmaya et al, 201 1). In particular, there is considerable research now available suggesting that transformational leadership is positively associated with organizational commitment in a variety of organizational settings and cultures (Guang-lu et al, 2012; Muterera, 2008; Avolio et al., 2004; Bono & Judge, 2003; Walumbwa & Lawler, 2003;
Dumdum et al., 2002; Koh, Steers, & Terborg, 1995; Lowe et al., 1996). The significance of the study was in many ways .First was this type of studies which associated between leadership styles and employee commitment which was not conducted previously has been conducted in this organization. It is
20
believed that this study will enhance deeper understanding on leadership behavior and the relationship towards organizational commitment which is relevant to MNC's in Malaysia especially among direct employees. This study also expected to help to answer the leadership styles and what is the commitment level of an employee towards organization. This study is also intended to establish his study also expected to help to answer the leadership behavior and what is system which can promote to improve employee commitment in MNC's and to enable MNC's leaders to adopt the most suitable leadership style to promote employees commitment . Meantime, it also helps to improve the productivity of the organization.
The findings of this study will contribute and help the organizations to face the outcomes of results in Malaysian context. The organizations can also identify the factors that increase organizations commitment .In usual condition multiracial employee face some challenges and problems when they are new to an organization. Based on this research, the leadership style which influences the employee commitment can be identified. It would provide valuable information to manufacturing companies generally and MNC specifically in Malaysia. Apart from that, this study will help the leaders to be well prepared because this study gives an understanding of the collective level as well as individual level to have adjustment employee commitment. The employee commitment will increase if suitable leadership style is demonstrated during carrying out the leader's duties. Besides, this research can help other researchers to obtain inforpation and as a guideline or reference to conduct their research in future.
Finally, this study provides practical contribution to an organization in training and development. Training and development are important parts in the leadership because training will help the leaders and expose them to demonstrate correct leadership style in carrying out their routine duties. With right leadership style and higher commitment level from the employee, an organization could perform effectively and efficiently to remain in competitive environment.
1.5 Scope of the study
This study will focus to examine Leadership style and Organizational commitment This study will be conducted in Module Department of Panasonic Energy Company in Kulim .The study of this research involves the direct employee which is the operators of Module Department .The main factor to conduct this study in Panasonic Energy Company in Kulim due particular company is newly established solar company which consists of various type leadership who were hired from different companies .The leaders background of knowledge and experience are also varies from one to another .Furthermore the direct labors are also hired from different background such as gender, race ,origin ,with and without experience ,worked under the supervision of various leadership style .Module department had been chosen for this study as it consist of the largest number of direct labors compares to two other production section which is wafer department and cell department .The employee commitment and performance is directly connected with the department productivity .In order to obtain high productivity and retain the direct employees this study is very essential to be conducted
.
1.6 Definition of Key Term
The major terms and definition can be seen along these upcoming five chapters.
1.6.1 Leadership
Leadership is applicable in any situation or circumstances on every organization. It has existed for a very long time period as long as people have shown interactions .It remains as a complex term and varies among scholars.
There are various type of issues are being faced by current organizations due to advance in technology, changes in economic,social and politics (James &
Collins, 2008; Leavy &Mckiernan, 2009). Leaders are requiring for organizations not only for utilizing their knowledge or ideas on the company's future but they are also needed for deciding a right choice once a circumstances or situation occur. According to researchers and scholars leadership is a combination behavior and skills which exhibits those skills (Bass et al., 2003; Bolden et al, 2003; James & Collins, 2008) In industrials areas, leadership concept are utilize to achieve their company goals and status according to Stogdill (1974,~.4).The relationship between two or more individual in a group for various issues would affect their interactions. There are several theories such as trait, power, namely, influence approach and etc. is used as a reference for leadership according to Yukl (2005).
1.6.2 Organizational commitment
The definition of organizational commitment is a higher strength in trust and loyal towards the particular organization and willing to exert efforts towards the organization due achieving its goals and status. Organization commitment is counted from their employee working progress, employee working hours and employee dedication. According to Ahmad, Javed, Iqbal & Hamad(20 14) if an organization has a full committed employee is capable in achieving a lower level of turnover and they have less intention to leave the company
..
Committed employee will be working with a dedicated behavior and they would be willing to accept any kinds of changes.According to Meyer and associates (Allen and Meyer, 1990; Meyer and Herscovitch, 2001) , there are three dimensions of organization commitment which is continuance, normative and affective.
1.7 Organization of the study
In this studies, do consists of five kinds of chapters and it is well organized according to its sequence. In chapter 1, it will be covering of project background, the project problem statement, the research objectives, definition of key and its organization of the study. In chapter 2, it will be representing about the entire previous studies based on this project. Chapter 3 will be discussing about this studies research design, population, data collection and statical analysis. The project results and analysis can be characteristic in this chapter 4. Chapter 5 (Discussion, Recommendation and Conclusion) shall discuss on reliability and discussion of the result, implication for practice and recommendation for further reset.
CHAPTER 2: LITERATURE REVIEW
2.0 Introduction
The literature review is a chapter where previous studies documentation will be included on it. This research had begun with the first step by undergoing some of the previous articles or journals about this particular topic. On the previous studies section, there was more detail studies had been gone through highly on the topic of employee engagement.
There are three major purpose of this project can be found in this literature review. Firstly, the entire purpose would be in understanding fully of the entire basic knowledge of this research. Secondly is to discover the similar of research purpose and its aim from other previous studies. Thirdly, learn some extra knowledge on other kind of concept but it is based on the same research problems and themes which are according to (Baker, 2000; Cavana, Delahaye
& Sekaran, 200 1 ; Leedy, 200 1 ; Perry, 2002).
2.1 Organizational Commitment
There are different kinds of methods can be utilized to provide an excellent level of commitment employees towards the organization. There are many cases being involve which is corresponding with employee commitment level.
Commitment is a concept that had to be gain from an individual towards the organization. The below list had categorized the commitment level into three kinds. Meyer & Allen (1 991) had suggested these kinds of ideas.
1) Identification - The organization goals, values and mission are being acceptance and succeed.
2) Involvement - Volunteers are being participated into the organization with a full of their willingness.
3) Loyalty - The loyal feeling should be held in a strong manner and can't be separated from their thought. They will be very faithful towards the organization.
The employee does have their own kind of behaviors which would affect the organization commitment level. There are several individuals who would motivate their selves from being lazy and they will focus towards the organization goals. There are several individual who would not care about the organizations goals but they might be influence towards social missions.
Long-term of membership can be advised able towards committed employee.
Most of organization is becoming worried with their own employee whom failed to show their loyalty and dedication towards their organization.
Employees do change or transfer jobs due to lack of commitment level towards the organization. These kinds of attitude would affect the entire organization turnover or economical level. Commitment can be brief into 3 characteristic which is employees belief, behavior and their attitude.
According to (Steers, 1997; Mowday, R.T, Steers, R.M, Porter, L.W (1979), consisting of employee with higher level of commitment would increase the rate of achievement of the organization goals. Therefore, these kinds of individual will consist of desire to succeed and they would have a better behavior and attitude
.
2.1.1 Affective Commitment
The definition of affective commitment is employee with a positive emotional and responsible in the organization. A committed employee would be working and perform his task in a better level. They will also commits to the organizations extra task as willing. Traditionally, the amount of commitment of an employee can be scale according to their ages, sexual, educational level and experience. 1V.J Allen and J.P (1 990) suggested that this kinds of problems can't be blame fully because the most important to have a committed employee is their own personality. Some individual does feel bored in faster rate compared to others. Therefore, affective commitment can be classified into three kinds of dimensions which is developing the organization with the involvement of emotion, define the organization's goals and vision and make sure the organization in a comfortable level for their employees. Mowday, Porter, & Steers, 1982 , the exchanges of principles would leads the advancing level of affective commitment. The organization will be responsible in providing rewards or punishing the labor with a warning memo as an contribution to improve the company level and their employee commitment scale. The literature review would express the nature organization situation for their employees.
2.1.2 Continuance Commitment
The employees trust and loyal towards the organization would represent their continuance commitment of the organization. There is a higher level of risk by leaving an employee losing his position on this organization. Thus, the organization might gain some benefits in letting the employee to drop his
position. Most of organization does faces issues such as employees leaving their position due to lack of salary or aged. Most continuance commitment employees can be found once there is some promotions are given, increase in salary or giving them a successful role within the organization. According to the employees, the cost of leaving the entire organization are much greater compared with the costs of staying on that particular organization. The types of losses can be categorized into three kinds which are monetary, professional and social. Below had described about the categorized types;
-
Monetary -the salary will be losses and benefits- Professional - The seniority or role-related skills will be losing - Social
-
Losing the bound of friendshipThe advancement of continuance commitment can be led by any elements which develop the cost of leaving of the entire organization according to Meyer & Allen (1991). The concept of self-investment is an employee do sacrifice or provide his entire life such as time, energy or effort on one organization growth (Allen& MeyerYl99O).Increased energy and effort by employees will basically stimulate their continuance commitment .By leaving an organization the employee will loss the valuable resources spent on the organization.
The imitation process will lead towards the normative commitment process which would affect the individuals learning abilities according to Meyer and Allen (1 997). The organization would belief that if the employee does not has
faith or loyal towards the leader, thus they might change over towards other organization.
2.1.3 Normative commitment
The real meaning of normative commitment is a type of employee which works for an organization just for an obligation even though there are not satisfied with their daily position or task. The higher level of normative employees would remain in the organization just for others satisfaction. As an example, an organization had provided that particular employee some payment for their past depts. and they had to work just to complete that depts. payment.
These kinds of situation do occur based on certain factors. Scholarship students can become the normative commitment because they might join and work for that organization just to repay back their contract. Additionally, the organization might have reward the employee in advance and they had to stay in that organization for a particular period. Employees could work for obligation just to upbringing their family status. Socialization and exchange can become the major role of developing the normative commitment.
According to Wiener (1 982) normative beliefs are cause of the development of normative commitment .Normative beliefs internalized through pre-entry which is family and culture and post entry which is organizational socialization processes. The second mechanism which operative in the development of normative commitment is the principle of exchange or also called a norm of reciprocity by Scholl (198 1) and according to this principle normative commitment developed among the employees through rewards received from the organization .This will instills a sense which obligate to
2 9
retaliate with commitment. According to Eisenberger Huntington, Hutchison,
& Sowa, 1986), the organizational commitment are relaying on the perception of employees. If the employee does highly support the organization, then it would increase the level of organizational commitment according to the Steers (1997). The long-term advantages of the organizations are depends on the employee's commitment.
2.2 T h e significance of Organizational Commitment
Work commitment does play an important role for every organization.
Committed employee will be leading the organization towards its goals. Work commitment is also can be known as desired to work because they will be too IoyaI and trustworthy to their organization. According to Kanter (1968) commitment to an organization also has strong relation with the profit from participating and also the cost of leaving the organization such as loss of stability of a working environment and the prestige .According to Angle &
Perry, 1981, employee's decision to quit from an organization is inversely related to the organizational commitment. When there is higher level of organizational commitments and high commitment loyalty will result to low levels of turnover. Therefore, the constant workforce can be succeeded and sustained against the external environment changes. According to the Liu Chiu and Fellows (2007), every motivated individual would be capable in completing their tasks and job in a better performance.
The interrelationship between commitment and job performance can be gain in a positive manner which was reported by Wiener and Vardi (1980). For this 30
current competitive economy, organization requires to consist of less amount of resources such as machine, man power and etc., and the amount of production should be higher. Committed employees will be very helpful for this kind of situation because they will be willing to proceed with extra task.
Organizations will be happy in gaining a higher level of productivity while lowering their resources.
The organization should decide whether they want to make their organization towards a higher level or not because they need to consist of committed employees if they want to grow their organization. Therefore, the organization is expecting to produce a higher level of productivity with a small amount of resources. Organization with committed workforces would consist of workers that are dedicated, no absent even though they are sick and remaining in the same organization.
Moreover, leaders in that particular organization should understand and learn to manage any kind of obstacle being faced during leading the organization.
According to Meyer and Allen (1997), a committed employee would stays in that organization no matter what circumstances are faced by the entire organization. Therefore, they would also work for their organization goals without acknowledging any obstacles. There is a high advantage in consisting of committed employee
2.3 Definition of Leadership
The leadership concept does have some issues for past decades, cultures, boundaries and countries. The issues have been written in various contexts and theoretical foundation by some well-known researchers. The existence between employee and organization would require a leadership concept most commonly. The actual concept of a leadership is inventing a better communication intercept between the employee and the organization.
Therefore, leadership is also a concept that would motivate and support other followers towards the coordinated path. Leadership style can be the key determinant of the organization's success or failure (Lok & Crawford, 2004) According to Yukl (2006), he defines that leadership is build inside an individual who consists of various kind of traits, behavior and attitude. That particular person should be capable in making decision while overcoming a pressured obstacle. Therefore, leader should be capable in communicating between three or more members in an organization to assign or restructure their task according to that situation.
.
According to Dansereau,
Yammarino& Markham ( 1995), the chain of leadership do consist of leaders, followers and connectivity between them .According to Ngodo (2008),in order to achieve organizational goal there is mutual effect and relationship between leader and subordinates
.
2.4 The Importance of Leadership
Even though, Countries do require effective leaders to build that country towards higher level. In our past decades, leaders do play a major role in conducting success of our country organization. Therefore, leader's is also important in motivating their employees to increase their organization potential according to Bass( 1990), Collins & Porras (1996) Manz &
Sims(l99l)and Sarros & Woodman(l993).In the context of manufacturing environment leaders and managers need to ensure total collective efforts are energized in order to achieve the organizational mission and vision. Bennis and Nanus (1985) has argued that a business with lack resources can still can be solved and but a business or an organization lack of leadership has minimum chance for survival.
According to Chandler (1962)' Katz & Kahn (1978)' Peters & Waterman (1982), the leadership concept does play major element in determining the organization. Therefore, leadership is fully responsible in the success and failure of an organization added by Bass(1990). Additionally, only the leaders and manager are the one who could weaken or strengthen their employee's self-determination. This kind of action would affect their company's success.
According to Russ-Eft (1999), there are many kinds of ways can be utilize to understand employee's situation but it does have a higher level of risk factors.
Gebert and Steinkamp (1991) suggest that giving pressure onto the relationship between leadership and employee would lead the organization towards success. Therefore, McDonough and Barczak (1991) do suggest that leadership style should be wise and fast in making up their decision because it 3 3
would influence the rate of production in the companies. Additionally, the leaders and managers should respond aggressively to advancement that occurs on the internal or external.
Niehoff, Enz, and Grover (1 990) strongly urged that the degree of employee commitment rely on the overall management culture and management style driven by top management actions .Likert (1961) believed that participative group management can achieve higher productivity and greater involvement of employees .Better relationship in an organization can allow manager's to focus on the needs and expectations of subordinates to establish and maintain effective work groups. Tosi and Tosi (1970), Long (19780) and De Cotiis and Summers (1987) has also proved that employees which are close with the leaders or managers during a decision making process would increase their level of commitment on the organization. There are thousands of studies and research based on leadership effectiveness but it had been proven that there was no profile that creates a great leader. Leaders should be consistently kept on understanding of their various kind of behavior employee all the time.
Therefore, the leaders should analyze the act of the employee in their workplaces and utilize the most effective leadership style according to their criteria. These are the main reasons why leadership is very important in organizations. A successful leader will consists of high level of understanding and knowledge in interior or ulterior of workplaces. Investors, stakeholder and financers acknowledge that the importance aspect in of business leadership as they say that a good leader could make a success of a weak business plan, but that a poor leader can ruin even if it is the best plan. Today business leaders are only thought of profit, the roles are becoming so big that it's no more
about running business .They actually making nations and creating world for the future generation. It's time to move from personnel ambitious to a larger vision, whereby more inclusive of economic need to take place.
2.5 Leadership Theories
Throughout time, leadership is built with the help of theories that can be categorized into several divisions such as behaviors, situational contingencies, traits and leaderships transformational. Based on Bass, 1990a, there are some attempt been taken during the research on leadership development according to the written theories. Thus, the relationship between the leaders and followers would produce a leadership concept. Therefore, the leadership theories had proven that it is a complex concept to be implemented on certain organization. To overcome organization obstacle, a leaders is required with higher level of knowledge and experience. In figure 2.1, there are three kinds of path to obtain leadership concept. That diagram had brief about the basic understanding of the leadership concept with an extra demonstration.
LEADERSHIP THEOFUES
111 NEW APPROACHES 111
Stogdill(1948) Mann (1959) Stogdill (1974) Lord, DeVader
& Allinger (1 986)
Kirkpatrick &
Locke (1 991)
FULL RANGE LEADERSHIP
Figure 2.1 : The basic Leadership Approaches McGregor7s theory
Theory of Lewin Lippit and White
Ohio State and University of Michigan Models
Managerial Grid
Leadership continuum Fiedler's Contingency Model
Hersey and Blanchard's Situational leadership House's Path-Goal Model Leader-Member-Exchange Theory
2.5.1 Trait Approach
The first experiment for leadership was about the traits approach theory. It does refer about personal characteristic. This traits research had been done by many kinds of university. The traits theory will be defining about the differences between leaders and follower because leaders will be placed in a better position. According to Bernard (1926), he told that leaders are born and can't be constructed because it requires many kinds of personal qualities. That person will be representing the entire organization and he should be capable in recruiting the entire folk towards the organization's goals. Therefore, traits theory will be referring about the differences between a leader and non-leaders.
The most basic leadership quality is to consist of higher level of intellectual, experience, self-confidence, better behavior, encouragement and sociability.
These kinds of characteristic will be the major key of leadership.
Based on the traits theory, a person will be fully capable in representing himself towards others in a much better way. The leader should be well- planner and well known in managing the entire task without any lapse. The traits approach is very important to become a better leader from the scratch.
According to the researchers, every leader does have the similar traits but various experience and knowledge only. Therefore, traits do represent the entire generation and it is a continuous from the previous ancestor's intellectual and special experience. Although hundreds of trait studies had been conducted but this research effort had failed to link any special traits which guarantee the success of leadership. One flaw of this theory is the lacking of situational factors that can influence the level of leader's
effectiveness.(GhiseIli, 1966; Stogdill, 1974) the early studies of traits theory had failed to prove that a person must own some particular of characteristics to become effective leaders and there were a weak correlation found between leader intelligence and leader effectiveness. A leader with certain traits could be effective in one specific area but may failed on the other and it cannot be single factor that guarantees the successful of leaders .According to Bass (1981) in some cases it has been found that the leaders will be effective however the effectiveness is not guaranteed .The relative importance of different traits is depend on the nature of the leadership situation.
2.5.2 Behavior Approach
The most popular behavioral theories are Douglas McGregorls Theory 'X' and Theory 'Y', and Dr. Rensis Likert's Four Management Systems. The behavioral approach is based on the study how leaders portray their behavior in the organization that in turn increase the effectiveness of the organization as a whole. According to Saal & Knight (1988) leaders were not born but effective leadership style can be taught .The behavioral theory assumes that leaders develop gradually by experience and maturity. Behavioral approach suggests that a leaders and managers will not behave the same way in handling situation; there will be a element of flexibility and adjustment in approaching issue or problem. According to Yukl (1989) leader's behavior base research has not been consistent and not conclusive. This problems normally are due several reasons such as inaccurate of measures, problems in determining causality in questionnaire studies, weakness in design of experimental studies and inattention to situational moderator variables. Blake, Shepard, and Mouton
(1964) had further developed theories on two-factor model of leadership behavior which is named "concern for people" and "concern for output." In this studies he examines behaviors into the two primaries subject either task or people. However, the behavioral approach is responsible for the developing the classification of leadership styles .This approach has provided managers suitable opportunities to secure greater insight into their own behavior.
2.5.3 Contingency Approach
There is an additional theory for leadership which is contingency theory. It is a theory that speaks more about adjustable and flexible of leadership. Most commonly, this theory is more effective compared with others. This theory will be based on democratic, autocratic and other kind of leadership system.
Actually an ideal leader will be providing a conclusion by interpreting and analyzing the entire circumstance. Obstacles will be overcome by leaders.
They would consider the background, situation, problem and etc. before conclude. According to McCall (1977) in the situation of hectic and fragmented pace of managerial work and it is quite impossible for the managers and leaders to apply complex theories and approach for every type of situation. According to Saal & Knight( 1988) situational theory allows leaders to be and act differently in every aspect of situation
.
This theory will be applicable for any leadership according to different aspect. Therefore, the leadership model is developed into 4 stages from immature stage towards mature stage which had been suggested by Hersey's and Blanchard's.Stage 1 = Direction Stage 2 = Explanation
Stage 3 = Participation Stage 4 = Delegation
Figure 2.2: Hersey's and Blanchard's Situational Leadership03 model The contingency theory is the most popular and effective theory for leadership concept which had suggested by Fred E. FiedIer" (Bedeian Arthur &Glueck, 1983). This theory would brief about the performance that can be done by the leaders during leading their employee and basically an explanation about interaction between leadership style and situational favorable. According to Fiedler's model the effective of leadership would increase the organization turnover. Therefore, it would increase the reputation level of the leaders and their communication skills between their followers. The contingency theory also explains about the leader's responsible and supporting level. The leaders
40
should be responsible in guiding their followers towards their organization goals. Leadership substitute's theory identifies aspects of the situation that make leadership behavior by hierarchical leaders redundant or irrelevant.
Various characteristics of the subordinates, task and organization serve as substitutes for leadership and / or neutralizers of its effects. (Yukl, 1989).
2.6 FULL RANGE LEADERSHIP APPROACH
The Full Range Leadership Approach which has been developed by Bass and Avolio (1994; 1997) includes a range of leader behaviors. This approach explains that the leaders uses many different kind of leadership style.
According to Bass & Avolio, 1994 the range of leadership style starts from transformational leadership to transactional leadership and reaching to the lowest leader interaction of laissez-faire leader style. This leadership styles described and believed to have an effect on individual and organizational level (Bass, 1990a; Yukl & van Fleet, 1992). Bass (1 985a) based his descriptions of transformational and transactional leaders based on Burns's (1978) ideas.
Burns (1978) proposed that one could differentiate ordinary from extraordinary leadership. Trottier et al. (2008) suggested that Full Range Leadership theory of Bass is a strategic organization development and was designed to enhance the impact of leadership on employee commitment.
Transactional leadership is an exchange relationship that involves the reward of effort, productivity and loyalty. The leaders transformational do change the level of development on the organization and its follower's emotions towards a positive manner. It creates a higher level of motivations and vision for the
upcoming future growth of the organization. During the transformation of the leadership style, the leaders will begin to motivate their followers beyond their expectations. So this would increase the employee's confidence level and develop the entire organization towards the next level. The followers would begin to feel a greater amount of respect and trust on their leaders based on the transformation of their leaders. According to Bass & Avolio, 1990b the
"backbone" of this theory is that followers are more motivated to enhance their performance by transformational leadership compared to transactional leadership.
2.6.1 Transformational leadership style
According to Garcia Morales, JimCnez-Barrionuevo, & GutiCrrez-GutiCrrez (2012), they defined Transformational leadership as supporting the employees to accomplish their organizations mission and enhance the perception of mutual interest. Thus, they will put their entire effort to achieve the organization's goals. Always they do figure out a method to ensure that the followers achieve their organization goals. The transformational leaders will always motivate and guide their follower to achieve their organization goals.
The actual definition of transformational leadership is to motivate their employee and influence them to become a committed employee.
Transformational leaders would have a higher level of ideas and behaviors than their followers. The leaders will be performing in a higher level of expertise in guiding their followers. Bass and Avolio (1990b) do suggest that the transformational leaders will become the follower's inspiration and they would be self-motivate to achieve their task. Respect will be found in between the relationship of the transformational leaders and follower. The
transformational leadership would develop a high level of trust and respect on their employee. Soon, the employee would be loyal to their leader and the organization. It would increase the organization turnover and its productivity.
The transformational leaders are capable in solving any kinds of problems while encouraging others. Bass and Avolio (1994) also suggested that the transformational leaders would develop their follower's encouraging and thinking capacity to face their future obstacle. According to Dubinsky, Francis Yammarino, Jolson and William (1995), they suggest that the leaders will be highly intellectual in deciding conclusions and they would gain the trust of their followers.
The leadership transformational can be characterize into five aspect according to Avolio, Bass & Jung, 1995; 1999; Bass, 1985a; 1997.
1
-
Idealized influence (attributes) 2-
Idealized influence (behavior) 3 ,- Inspirational motivation 4 - Intellectual simulation 5 - Individualized considerationThe leader's inspiration motivation does lies on his behaviors and decision making skill on the upcoming criteria. According to the Avolio, Waldman and Yarmmarino (1991), the leader's behavior would represent his entire personal accomplishments and develop the employees trust. These potentials are realized through intellectual stimulation and individualized consideration when the person is involving a leadership role. These kinds of behavior would
inspire their followers towards a higher level of confidence and assured that their leader is more capable than anyone in overcoming a dilemma. The leader's inspirational motivation would increase the strength of trust onto their employee in achieving their companies' vision.
They will be capable in listening and helping their followers to build their own confidence level. They do trust that growth of an organization is based on the individual's developmental. These kinds of leaders would get rid of any obstacles in the system and prevent their followers development towards an optimum performance. Sometimes, leaders will become a coach, mentor or subordinates for their followers. Based on Bass , 1985a , higher expectation are gain by the subordinates during their leaders inspirational motivation.
They are capable in handling sophisticated issues in a very simple manner by utilizing various symbols or methods to focus their efforts. Self-determination do represent the higher level of commitment and responsible in achieving the future goals Bass
,
1985 suggest that a transformational leader would always provide intellectual stimulations to employees all the time by supporting their employee whenever they are meet with some obstacles. As the latest method in achieving organizational goals and objectives, the leaders need to keep on eye of the status quo and inspire the employee all the time. Subordinates always feel comfortable to work under this kind of leader because these kinds of leaders prefer to take advice or suggestion from their subordinates. The transformational leader motivates their followers according with several methods which can be seen in figure 2.3.The leaders are able to expand the follower's portfolio of needs. According to Maslow's Hierarchy the followers are not only concerned with the basic needs such as safety, physiological, and social needs but is also concerned with higher order needs such as esteem and self-actualization. Through engaging the five components of the transformational leadership style the leaders able to build confidence in their subordinates which along with the increased portfolio of needs, changes the culture of the organization. As opposed to the purely transactional approach, followers now have a heightened view of the probability of success and value the designated outcomes to a greater extent.
Figure 2.3: Transformational leadership process (Bass, 1985a)
LEADER : EXPANSION OF
FOLLOWER'S PORTFOLIO OF FOLLOWER'S SELF FOLLOWER'S PORTFOLIO OF
I
LEADER : CONFIDENCE
- L
I
BUILDIlUG IN FOLLOWERI
Iv
1LEADER : ELEVATION OF FOLLOWER'S SUBJECTIVE PROBABILITIES OF SUCCESS
LEADER : ELEVATION OF VALUE OF DESIGNATED OUTCOMES
LEADER : CHANGE IN
ORGANISATIONAL CULTURE
PROCESS AS IN FIGURE 2.5 UNDER SECTION 2.5.2
FOLLOWER: CURRENT STATE
MOTIVATION TO ATTAIN
OF EX
